In a regulatory filing, the company said that it is required to resubmit the PA application within 120 calendar days.
RBI has directed Paytm to “seek necessary approval for past downward investment from the Company in to PPSL, to comply with FDI Guidelines”.
The central bank also told the payment firm not to onboard new online merchants.
The company said that the development has no material impact on its business and revenues since the communication from RBI is applicable only to onboarding of new online merchants.
Paytm reiterated that it can continue to onboard new offline merchants and offer them payment services including All-in-One QR, Soundbox, Card Machines, etc.
“Similarly, PPSL can continue to do business with existing online merchants for whom the services will remain unaffected,” Paytm said.
“We are hopeful of receiving the necessary approvals in a timely manner and resubmitting the application,” it added.
The RBI had in March 2020 released the payment aggregator framework which stated that all payment gateways are required to obtain a licence to acquire merchants, and offer them payments services.
So far at least 185 fintech firms including big names like Cred, Razorpay, and PhonePe submitted proposals seeking the licence.
Over the past several months, RBI has been holding presentations with payment gateway providers and other fintech firms that have applied for the licence. However, it has been strict in its evaluation of these applications, sources earlier told ET.